Starbucks' La Boulange platform reaches East Coast

Starbucks’ La Boulange food offerings are scheduled to reach Boston on Tuesday, the last major market to see the addition of the new pastry lineup in 2013 before the coffeehouse giant turns to its annual holiday-related promotional push.

Once the holiday season is over, however, Starbucks will resume its ongoing plan to add the new La Boulange lineup of sweet and savory breakfast pastries to about 7,000 company-owned locations domestically, spokeswoman Holly Shafer said Monday.

With the rollout in Boston, about 3,200 Starbucks locations will offer La Boulange pastries, Shafer said. Last week, the new food offerings reached New York stores, and they are available on the West Coast and in cities like Chicago.

Rigo started with breakfast, creating a lineup of classic French croissants and savory tarts with toppings like butternut squash, ham and cheese, and spinach. Cakes include mini pumpkin loaves and caramel apple muffins. The new items are warmed to order in the chain’s existing Turbo ovens.

A reworking of lunch offerings is next, with new sandwiches, salads and soups being tested in a handful of San Francisco locations. Shafer said that the test will be expanded to a few more stores in October, but the company is not ready to disclose timing on any lunch rollout; breakfast is currently the priority.

Sales-driving potential

In a report last week, a Wall Street analyst hailed the new pastries as a success, saying the platform could prove to be a significant sales driver.

Sharon Zackfia of William Blair & Company LLC did an analysis of the La Boulange launch in Chicago, roughly one month after the introduction there to allow restaurants time to adjust to the warming times required for the pastries.

Prior to the La Boulange rollout, Starbucks’ food offerings represented only about one out of three transactions nationally, averaging about 19 percent of the sales mix in U.S. locations. With the introduction of La Boulange, however, Zackfia said, “Food could represent the single largest incremental driver of U.S. comps over the next few years.”

Looking at five Chicago locations, Zackfia studied the “before” and “after” impact of the new menu items. Before the rollout, the stores averaged about 259 transactions per hour during the peak morning rush between 8 a.m. and 9 a.m. The food attachment rate averaged about 17 percent.

After the rollout, however, the stores recorded an average of 244 transactions per hour—a throughput decline of about 6 percent—with the food attachment increasing to 25 percent.

Zackfia noted, however, that two of the five units had no discernable negative impact on throughput. Those units increased the number of transactions during the hour.

The new products also brought slightly higher prices, however. The La Boulange items in the bakery case were about 7 percent higher in price, on average, which Zackfia argued could offset any slowdown in throughput.

“With our rough calculation suggesting every 5-percentage-point increase in food penetration equates to about 3 comp points, our analysis suggests that Chicago could be achieving a 4-percent to 5-percent comp lift on the La Boulange rollout, assuming peak morning hour results are replicable during the rest of the day” — which may not be the case, she noted, as the bakery case revamp focuses on breakfast items at this point.

In any event, Zackfia added, “It is hard not to regard La Boulange as a tremendous success for Starbucks, as food items sold per hour at the Chicago stores we analyzed rose from a range of 28 to 61 prelaunch to 52 to 71 after the launch. This performance is even more impressive in light of the intensity of competition in Chicago, as it is an established market for Dunkin’ Donuts, as well as the home court of McDonald’s.”